Correlation Between Baidu and MOGU
Can any of the company-specific risk be diversified away by investing in both Baidu and MOGU at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Baidu and MOGU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and MOGU Inc, you can compare the effects of market volatilities on Baidu and MOGU and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Baidu with a short position of MOGU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and MOGU.
Diversification Opportunities for Baidu and MOGU
Very weak diversification
The 3 months correlation between Baidu and MOGU is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc and Baidu is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Baidu Inc are associated (or correlated) with MOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOGU Inc has no effect on the direction of Baidu i.e., Baidu and MOGU go up and down completely randomly.
Pair Corralation between Baidu and MOGU
Given the investment horizon of 90 days Baidu is expected to generate 3.22 times less return on investment than MOGU. But when comparing it to its historical volatility, Baidu Inc is 1.9 times less risky than MOGU. It trades about 0.11 of its potential returns per unit of risk. MOGU Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 213.00 in MOGU Inc on September 22, 2024 and sell it today you would earn a total of 36.00 from holding MOGU Inc or generate 16.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Baidu Inc vs. MOGU Inc
Performance |
Timeline |
Baidu Inc |
MOGU Inc |
Baidu and MOGU Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baidu and MOGU
The main advantage of trading using opposite Baidu and MOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, MOGU can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MOGU will offset losses from the drop in MOGU's long position.Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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